Tuesday, August 25, 2009

Agile 2009 Slides Now Available

I’ve made my slides for Agile 2009 available in the document archive of agilemanagement.net for everyone who attended or not to use. The great news is that Ryan Martens is interested in applying these ideas at Rally Development already.

I should also mention that my 3rd technique in these slides is similar to Todd Little’s model which appeared in the recent book, Stand Back and Deliver! The model uses four classifications of projects that Todd calls Sheep Dogs, Colts, Bulls and Cows. The Cows are analogous to my Cash Cows, Bulls to Major Growth Market and Colts to Innovative/New. If there is a difference it’s that my model is entirely market driven / external while Todd considers a complexity a dimension in the classification. These models are so similar that I will consider merging mine with Todd’s with full attribution.

Chris Matts’ believes that my first technique, previously published here in 2005 is similar to but less useful than Neil Nickolaisen’s model also published in the recent book, Stand Back and Deliver! Neil’s model maps projects at a portfolio level into 4 categories via a 2x2 matrix or dimensional assessment of market differentiation and alignment with corporate mission. He calls the segments: Don’t Care; Partner; Differentiating; Parity. While this model is certainly compatible with my model they are not the same. Neil’s model works at the project and portfolio level and assumes that the corporate mission is somehow correctly aligned with a strategic position and the market demands. My model works at the individual feature level and is again directly market facing insuring that the feature mix chosen for a project or iteration are aligned with the strategic positioning of the business and the allocation of types is aligned with the propensity for risk in the business plan or prospectus. Neil’s model is certainly compatible with mine. If for example, a project initiative assessed as “Parity” but the product owner was picking a lot of “Differentiator” class features for the product mix then there is clearly a miss match. So I believe that Neil’s model could be added as a fourth technique to the three presented here.

However, it’s worth noting that these are tools that can be used as choices and are not necessarily all designed to be used together. My 3rd technique, like Todd’s and Neil’s are designed to allocate resources to control commitment to projects across a portfolio. To spread risk effectively. It may not make sense to use more than one of these techniques at any one company or division. Choose the one that resonates best with your organization. Technorati tag: David+Anderson, Agile+Management, Agile, Lean, Kanban, Software+Engineering, Project+Management, Risk+Management, Risk, Portfolio+Management, Program+Management

Agile 2009 - New Approaches to Risk

I’ve uploaded a PDF of my slides for Agile 2009.

Download New Approaches to Risk Management PDF

Here is the original session submission…

Presenter: David J. Anderson

Title: New Approaches to Risk Management

Background

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For almost a decade the agile community has claimed that agile development is a risk-driven approach. Yet there is very little published material on agile risk management. A survey of the transactions of the Agile conference over 4 years reveals no explicit presentation on risk management. An online search reveals a number of blog entries and articles on agile risk management(of which more later.)

Traditional risk management (defined in the PMBoK, Prince II, CMMI and other frameworks) takes an event driven approach to risk. It seeks to model external variations that affect schedule, budget and scope on projects. Traditional risk management focuses on what Walter Shewhart called “assignable cause” variation [Deming renamed this “special cause”.] The model is simple: try to build a list of external events that might occur; assess the impact and likelihood of occurrence; assess the cost of mitigation options; decide whether to mitigate (reduce chance of occurence) or create a contingency plan (to recover in the event of occurence.)

Most of the agile risk management articles surveyed look at how to implement traditional risk management in a more agile way. They address how to fit risk management into iterative, incremental development and how to assess and manage risks in a collaborative, transparent manner. There appears to be no literature that discusses how to apply agile and lean ideas that revolutionize risk management.

Meanwhile, traditional (non-agile) project scheduling techniques treat all tasks homogeneously from a risk management perspective. Elementary scheduling techniques do not account for variance in task completions, e.g. the Gantt chart technique. More advanced techniques (PERT, Critical Chain, Last Planner) account for variation and provide some risk mitigation against chance (or common) cause variation through time buffering. However, these techniques still tend to treat all tasks homogeneously from a risk perspective.

Project risk management literature does not appear to have advanced much in the last 30 years.

New Approaches

———————

The application of Lean pull systems (kanban) and Real Options Theory in agile methods is providing new sophisticated means to manage overall business risk in technology projects and software delivery.

This tutorial will describe in detail 3 techniques that have evolved in the kanban community that provide improved project flexibility and business agility together with increased sophistication in risk management.

(1) Using classes of service based on cost of delay/failure functions

Classifying customer-valued deliverables according to the cost of delay (or failure) function allows for different prioritization policies to be implemented on the fly by self-organizing teams significantly reducing the business risks of late delivery. This scheme classifies customer deliverables such as user stories heterogeneously according to the loss incurred due to late delivery. Assigning different colored sticky notes, or index cards according to the classification allows team members to quickly assess risk and pull the most important item through the system in a self-organizing manner

Four example classes of service will be discussed along with their related pull system policies (for prioritization and scheduling) will be presented. The examples are: expedite; fixed delivery date (unit step cost of delay function); quantitative value delivery; and qualitative value delivery. Other classification schemes are possible and would be domain specific.

(2) Iteration Backlog selection based on market risk

This scheme allows for classification of customer-valued deliverables into 4 categories that are aligned with strategic planning and marketing objectives, namely: commodity (or table stakes); differentiator; spoiler; and cost saver. Features or user stories in each category exhibit different risk of change (deletion from scope, or change in definition) due to market conditions during the lifetime of the project, prior to release. The variance in market risk can be used to quickly prioritize iteration backlogs and target backlog items for iterations within an overall project schedule. The scheme mitigates the risk of rework (or waste) caused by changes in scope associated with changing market and business conditions.

(3) Risk-based Portfolio Management

This scheme allows the balance of resources and funding across a portfolio of projects or business initiatives based on the alignment of a project or development initiative with the strategic positioning of the business and its desired risk exposure.

Projects can be classified in to 3 categories: cash cow; mainstream developing market; and emerging market. Portfolio management is conducted similar to investment portfolio management by balancing investments and risk according to the risk preference of the investor. Hence, cash cow is analogous to bonds in an investment portfolio, mainstream developing market, is analogous to large cap stocks, and emerging market to small cap stocks. Resources and funding are allocated according to desired risk profile and kanban systems established for each line of business (or business initiative). Market releases (or projects) are defined to release value optimally based on transaction and coordination costs of making such a release.

Summary

———-

These three techniques combine elements of Lean Thinking and Edwards Deming’s New Economics (cost of delay/failure functions, waste (transation and coordination costs, rework or scrap)), Real Option Theory and Decision Tree analysis to provide methods that enable simple, fast, and often self-organizing approaches to maximize business value and manage risk throughout a portfolio and the project lifecycle.

Notes

——-

Most of this material has been previously presented anecdotally as part of presentations on kanban. Some of it has been documented at agilemanagement.net as blog posts. However, this tutorial will pull it all together, formalize it as a risk management approach and refine and develop some of the ideas.

The material is therefore new in this format but based on work and presentations given over the last 2 years.

The presentation will likely be trialed at various smaller venues prior to Agile 2009. In the first instance at the kanban conference in Miami in February 2009 to an audience of perhaps 50 people. Other opportunities of rehearsal performances will be available at local events such as the San Diego XP Users Group in May 2009.

I intend to submit a formal paper for the transations.

Reference Material

—————————

Survey of online articles on agile risk management

Appelo, Jurgen, http://www.noop.nl/2008/06/agile-risk-management.html

Cottmeyer, Mike, http://blog.versionone.net/blog/2008/05/agile-risk-mana.html

Cottmeyer, Mike, http://blog.versionone.net/blog/2008/05/agile-risk-ma-1.html

Cottmeyer, Mike, http://leadinganswers.typepad.com/leading_answers/2007/09/agile-risk-mana.html

Fitzgerald, Donna, http://www.cutter.com/research/2006/edge060711.html

Griffiths, Mike, http://leadinganswers.typepad.com/leading_answers/2007/09/agile-risk-mana.html

Rangaswami, JP, http://confusedofcalcutta.com/2007/07/06/how-risk-management-affects-agile-approaches/

Smith, Preston and Roman Pichler, http://www.ddj.com/architect/184415308

Thomas, Steven, http://www.itsadeliverything.com/articles/agile_risk_management.htm

Wednesday, June 17, 2009

Changes @ AgileManagement.net

I’ve been making some changes at AgileManagement.Net to make it easier for readers to find information and follow new posts. I’ve created separate blog pages with separate RSS feeds for Lean, specifically Kanban, and Agile+CMMI.

For now the existing Agile Management blog will continue to aggregate all the content. Later I will reduce it to Management topics only. However, I will maintain the existing RSS feed for both the home page and the Agile Management blog. The RSS feed will continue to aggregate everything that is posted to this site. The new RSS feeds should enable aggregators to be more focused. Kanban sites can pull the Channel Kanban RSS feed while CMMI sites can pull the Channel CMMI RSS feed.

As a result of these changes, some content in the site has disappeared the navigation or the archive search. The articles specifically about the Agile Management book are no longer available through the site navigation. However, they are still in the content management system and still available on the Internet via direct links. Older news articles that do not appear on the front page will also not be navigable but again they have not been deleted and are still accessible via direct links.

I hope that these changes provide a genuine improvement in utility for users of the site and those who value its content. There are yet more changes to come as I prepare my web presence for the next decade and modify it to accommodate my newer interests in Kanban, CMMI, and other newer areas like Real Option Theory, Management, Decision Making, Decision Bias, Neuro-psychology and Risk Management.

Wednesday, June 10, 2009

Agile+CMMI Conference Anyone?

In a similar vein to the Lean & Kanban 2009 conference I am thinking of pulling together an Agile & CMMI event. I really feel that a small focused event is needed to kickstart the Agile CMMI community and energize potential adopters.

After some initial market research via my Agile Management Yahoo! group and Hillel Glazer’s Agile CMMI LinkedIn group and Twitter, it looks like we are targeting early December or mid-January somewhere in Florida.

Please leave comments indicating which dates you would prefer, which location (a) Tampa, (b) Orlando, (c) Miami, and please recommend anyone you feel should be an invited speaker at such an event. Would you like 1.5 days or 2.5 days and how much of that time should be dedicated to open space?

[Current voting as of 6/17 - will try to update this daily for a while]

1. Tampa 60%
2. Orlando 20%
3. Miami 20%

Your comments and commitments to attend are vital if this event is to go ahead. Without sufficient interest we won’t run the event. Technorati tag: David+Anderson, Agile, CMMI, SEI, Hillel+Glazer

Review on Agile Journal

This is a very thorough review by Brad Appleton. It was posted to Agile Journal several years ago but I don’t remember reading it. It accurately describes how the book synthesizes Don Reinertsen’s work with Eli Goldratt’s work and applies them to agile software development. Brad describes me as the Peter Drucker of software management. Quite a compliment!